SC gives Ombudsman access to MWSS papers

Move seen to boost plunder raps vs water officials
In an unprecedented move, the Supreme Court (SC) has allowed the Office of the Ombudsman to have access to various documents of the Metropolitan Waterworks and Sewerage System (MWSS) and its executives in connection with plunder raps filed against its officials and those of Maynilad and Manila Water, MWSS concessionaires for the East Zone and the West Zone, respectively.

This was revealed on Monday by Rodolfo Javellana Jr., Water for All Refund Movement (WARM) president and spokesman, who said they received last Thursday a notice from the SC en banc granting a letter-request of the Office of the Assistant Ombudsman to procure certified copies of case records that are otherwise strictly confidential.

In an en banc SC order, the tribunal allowed Assistant Ombudsman Joselito Fangon to obtain certified copies of the movement’s case records that had been kept from the public during the Arroyo administration.

In August last year, WARM petitioned the SC to order a complete refund and accounting of all mothballed projects, including the controversial pass-on of corporate income taxes to water consumers in the East and West zones.

On March 6 this year, the movement and Gloria Dalida filed plunder charges against the officials of MWSS, Maynilad and Manila Water.

Edsel Tupaz, lawyer for WaterWatch Coalition, also a petitioner in the cases against MWSS and its two concessionaires at the High Court, hailed the Ombudsman gaining full access to all documents on “conflicting interests” among MWSS and its concessionaires, among other papers.

The documents, according to Tupaz, will show “excessive entanglement and executive bonuses and perks at abominable amounts, including a ‘rate rebasing bonus’ given to MWSS employees for having approved previous water rate hikes sought by the two concessionaires.”

The Ombudsman, he said, can use these documents “to show that over P43 billion have been plundered to date.”

According to Andre de Jesus, lawyer for WARM’s case at the High Court, “the concessionaires’ passing-on of taxes to the consuming public, tax holiday or not, cannot be properly characterized as an ‘expenditure’ that may be passed on by a water company such as Maynilad and Manila Water, companies no doubt impressed with public interest.”

WARM is seeking oral arguments at the SC to properly ventilate the issues.

Maynilad and Manila Water, however, have maintained that they are not “public utilities” regulated by public service laws and by the 12-percent profit cap but are “mere agents” of MWSS.

Recently, lawyer Emmanuel Caparas, MWSS chief regulator, resigned after the Commission on Audit ruled that he was holding conflicting positions, serving as both chief regulator and member of the board of trustees of MWSS.

Caparas said his resignation had nothing to do with pending arbitration cases filed by Maynilad and Manila Water after MWSS denied their petitions for water rate increase last September.

Also last September, instead of approving a rate hike, MWSS ordered rate reduction for rate rebasing from 2013 to 2017.

This rate reduction order, however, was preempted by arbitration.

The MWSS order was an “empty command,” said de Jesus, also lawyer for WARM in libel cases filed by Maynilad and Maynilad CFO Randolph Estrellado against the movement last May.

In making a case for a refund, de Jesus cited a Meralco ruling in 2003 where the court ordered that income tax should be borne by the taxpayer alone, not the public at large. Because no benefit is derived by customers of a public utility from its corporate income tax, the court then ruled that the burden of paying income tax should not be shifted to consumers by including the same in the computation of its operating expenses.

“Even if Maynilad and Manila Water would say that they are mere agents and contractors of MWSS under their concession agreements, still every agent is bound to render a complete and fair accounting,” de Jesus said.

“Both concessionaires had separately applied for, and were granted, income tax holidays. So, if Maynilad and Manila Water are ‘mere agents’ of MWSS, why did they keep collecting income taxes from us water consumers, and then directly benefit from those sums, booked under their corporate financial statements, despite enjoying income tax holidays? Our computation shows that those sums are now at least P8 billion,” he added.

Last May, Maynilad and Estrellado filed libel raps against WARM, Javellana and The Manila Times. Two libel complaints are pending before two prosecutors, one at Quezon City and another at Makati City, based on the same and allegedly libelous article published by The Manila Times.